EXPLANATORY STATEMENT
Tariff Concession Instrument No. 0618385
Customs Act 1901
Background
Part XVA of the Customs Act 1901 (the Act) sets out a scheme under which Tariff Concession Orders (TCOs) may be made by the Chief Executive Officer of Customs (the CEO). A lower rate of customs duty applies to goods that are the subject of a TCO.
Under section 269F of the Act, a person may apply to the CEO for a TCO in respect of goods. If the CEO is satisfied that the application is not in respect of goods specified in section 269SJ of the Act, which sets out those goods that cannot be subject to a TCO, the CEO must decide whether the application meets the core criteria.
Section 269C of the Act provides that a TCO application meets the core criteria if, on the day on which the application was lodged, no substitutable goods were produced in Australia in the ordinary course of business. Section 269B of the Act provides that ‘goods produced in Australia’ has the meaning given by section 269D, ‘ordinary course of business’ has the meaning given by section 269E and ‘substitutable goods’ in respect of goods the subject of a TCO application, means goods produced in Australia that are put, or are capable of being put, to a use that corresponds with a use (including a design use) to which the goods the subject of the application can be put.
Subsection 269P(3) of the Act provides that if the CEO is satisfied that a TCO application meets the core criteria, the CEO must make a written order (a TCO) declaring that the goods the subject of the TCO application are goods to which a prescribed item of Schedule 4 to the Customs Tariff Act 1995 (the Tariff) specified in the order applies.
Bluescope Steel Ltd applied for a TCO in respect of certain electro-plating line parts on 8 November 2006.
Instrument
TCO No 0618385 was made on 19 January 2007. It declares that those certain electro-plating line parts are goods to which item 50 of Schedule 4 to the Tariff applies since the CEO was satisfied that no substitutable goods were produced in Australia. The general rate of duty on these goods is 5%. The rate of duty for the goods subject to the TCO is 0%.
Consultation
Subsection 269K(1) of the Act provides in part that as soon as practicable after accepting a TCO application as a valid application, the CEO must publish a notice in the Gazette which includes an invitation to any person who considers that there are reasons why the TCO should not be made to lodge a submission with the CEO. The CEO did not receive any submissions in response to this invitation.
Commencement
Subsection 269S(1) relevantly provides that a TCO is to be taken to have come into force on the day on which the application for the TCO was lodged. TCO No. 0618385 is taken to have come into force on 8 November 2006.
The TCO does not affect the rights of a person (other than the Commonwealth) as at the date of registration so as to disadvantage that person or impose liabilities on a person (other than the Commonwealth) in respect of anything done or omitted to be done before the date of registration. The rights of importers will be beneficially affected. Under paragraph 126(1)(r) of the Regulations, importers of such goods will be able to apply for a refund of duty on goods imported since the day on which the TCO is taken to have come into force. The TCO does not impose any liabilities on any person.
Overview
The Customs Act 1901 was enacted by the Australian Parliament to manage and regulate customs duties and tariffs on goods entering and exiting the country. The Act was introduced to address the need for a structured approach to handling the import and export of goods, ensuring that customs duties are applied fairly and efficiently. Part XVA of the Customs Act 1901 provides the framework for Tariff Concession Orders (TCOs), which are used to offer reduced customs duty rates on certain goods under specific conditions. The policy objective behind the introduction of TCOs is to support Australian industries by lowering the cost of imported goods that have no locally produced substitutes, thereby promoting competition and economic growth. In the case of Tariff Concession Instrument No. 0618385, the Chief Executive Officer of Customs granted a concession for certain electro-plating line parts, reducing the duty rate from 5% to 0%, after determining that no substitutable goods were produced in Australia. This decision was made following an application by Bluescope Steel Ltd and subsequent consultation processes outlined in the Act.
Scope and Application
The Customs Act 1901, specifically Part XVA, allows for the creation of Tariff Concession Orders (TCOs) by the Chief Executive Officer of Customs. This instrument applies to individuals and entities that apply for a TCO in respect of goods that do not have substitutable goods produced in Australia. The process involves satisfying the core criteria, such as the absence of substitutable goods produced in Australia, and the application being lodged in accordance with the requirements of the Act. Once the CEO is satisfied that the application meets the criteria, a TCO is issued, effectively applying a lower rate of customs duty to the specified goods. This legislative provision ensures that certain goods, like the electro-plating line parts in this case, receive a tariff concession when they do not have equivalent domestically produced alternatives. The TCO does not retroactively affect the rights of any person, including the Commonwealth, ensuring that the benefits are applicable only to future transactions involving the specified goods.
Key Provisions
The Customs Act 1901, as amended, provides the framework for the creation and implementation of Tariff Concession Orders (TCOs). Section 269F allows for an application to the Chief Executive Officer of Customs (CEO) to be made in respect of goods, seeking a TCO. Section 269SJ outlines goods that cannot be subject to a TCO, while section 269C specifies the core criteria an application must meet. Specifically, for the CEO to consider a TCO, there must be no substitutable goods produced in Australia on the date the application is lodged. Definitions for key terms such as "substitutable goods" and "ordinary course of business" are provided in sections 269B and 269D respectively.
The obligations imposed by the Act on the CEO include assessing whether the application meets the core criteria (section 269C) and publishing a notice in the Gazette inviting submissions from interested parties (subsection 269K(1)). In this instance, the CEO was satisfied that the application by Bluescope Steel Ltd for certain electro-plating line parts met the core criteria, as no substitutable goods were produced in Australia on the date of application. Consequently, the CEO issued TCO No. 0618385, declaring that the specified electro-plating line parts are subject to a 0% duty rate, rather than the general rate of 5%.
Failure to comply with the requirements of the Act can result in civil and criminal consequences. Subsection 269P(3) mandates that the CEO must make a written order if the application meets the core criteria, but does not specify penalties for non-compliance. However, breaches of related provisions in the Customs Act 1901, such as incorrect declarations or fraud, can lead to fines and imprisonment. For example, section 136 imposes penalties of up to $22,200 and/or two years imprisonment for breaches involving false statements. Additionally, section 142 provides for fines of up to $111,000 and/or five years imprisonment for more serious offences such as smuggling. The TCO itself does not impose any liabilities on any person, as outlined in the explanatory statement.